India’s defence exports have grown nearly 50-fold in a decade — from Rs 700 crore in FY2014 to Rs 38,400 crore in FY2026 — yet the country is still not among the world’s top 25 arms exporters. The next phase of growth could therefore depend less on expanding existing markets and more on where Indian weapons, ammunition, aerospace systems and defence electronics can find new buyers.
According to Kotak Institutional Equities report identifies Europe, Armenia and Africa as three important avenues for India’s next defence-export push, as countries look to diversify suppliers, rebuild military inventories and seek more cost-effective alternatives to Western and Russian systems.
The government has set a target of Rs 50,000 crore in defence exports by FY2029, a goal Kotak believes is achievable. But the bigger opportunity may lie beyond that target.
India’s export story is evolving from supplying components and sub-assemblies to foreign defence companies to increasingly selling complete indigenous weapon systems to overseas militaries.
From Rs 700 crore to Rs 38,400 crore
India’s defence-export growth has accelerated sharply over the past decade. According to data cited by Kotak, exports increased from Rs 700 crore in FY2014 to Rs 38,400 crore in FY2026. The brokerage attributed the growth to rising domestic defence production, easing export controls, government efforts to expand India’s presence in global defence markets and growing interest in cost-competitive Indian platforms. The government is targeting exports of Rs 50,000 crore by FY2029.
Kotak estimates that achieving the target would require roughly a 21% CAGR between FY2025 and FY2029, but believes the target remains within reach as Indian systems gain greater international acceptance.
The brokerage also points to the operational validation of Indian air-defence capabilities during Operation Sindoor as a potential catalyst for international interest. Yet there is a striking gap between India’s rapid growth and its position in the global market.
The US remains the biggest market, but the map is changing
The US continues to be India’s largest defence-export destination. Kotak estimates that the US accounted for around 50% of India’s defence exports between FY2019 and FY2024.
However, the brokerage sees the export geography broadening, with Europe and Armenia emerging as particularly important markets and Africa representing a potentially much larger opportunity. The three markets offer different opportunities for Indian defence companies.
Europe is looking for ammunition, missiles, aerospace components, UAVs, engines, radars and electronics as countries increase defence spending.
Armenia has emerged as a buyer of complete Indian weapon systems as it seeks to reduce dependence on Russia.
Africa, meanwhile, is looking for alternatives to established suppliers such as China and Russia, but financing remains a major consideration.
Cost could become India’s biggest export weapon
One of India’s strongest advantages in the international defence market could be price. Kotak estimates that Indian defence products can be significantly cheaper than comparable Western systems, particularly in missiles, rockets, drones, electronics, radars, ammunition and explosives.
For missile and rocket systems, Indian products can be 20-50% cheaper than Western alternatives, according to the brokerage. That price advantage could become particularly important in Asia, Africa and the Middle East, where governments often have to balance capability requirements against constrained defence budgets.
Akash vs Western air-defence systems
The Akash surface-to-air missile system is one example. Kotak estimates the cost of an Akash missile at around $500,000, compared with approximately $800,000-$1 million for missiles associated with the Western NASAMS system.
Developed in India and manufactured by Bharat Dynamics Ltd and Bharat Electronics Ltd, Akash has already secured an export customer in Armenia.
The system has also attracted interest from countries including Egypt, the UAE, Vietnam, the Philippines, Brazil, Belarus, Malaysia and Thailand, according to Kotak.
The brokerage sees Akash as particularly important because it combines indigenous content with a comparatively low cost.
Pinaka offers another price-led opportunity
India’s Pinaka multiple rocket launcher represents another potential export product. Kotak puts the approximate cost of a Pinaka rocket at $100,000, compared with around $150,000-$200,000 for a US HIMARS rocket.
Armenia has already signed a contract for Pinaka, providing India with another overseas reference customer for an indigenous long-range artillery system.
BrahMos shows India cannot compete on price alone
India’s export proposition, however, is not based entirely on being the cheapest supplier. The BrahMos cruise missile is a case in point. Kotak estimates the cost of a BrahMos missile at around $3 million-$5 million, compared with approximately $1.5 million-$2 million for the US Tomahawk. Yet the BrahMos has attracted substantial international interest.
The Philippines has already signed a deal for the system, while around 15 other countries have reportedly expressed interest, according to Kotak.
Europe: India’s next industrial opportunity
Europe could become one of the most important destinations for Indian defence companies as governments across the continent increase spending following the Russia-Ukraine war. Kotak argues that Europe’s rearmament, along with concerns over the reliability of long-term US security commitments, is creating opportunities for new suppliers.
Indian companies including Reliance, Tata, Bharat Forge and Mahindra have entered partnerships with major European defence and aerospace companies such as Dassault, Airbus and Rheinmetall. These partnerships cover areas including artillery ammunition, C295 transport aircraft and jet engines.
Ammunition could be one of the biggest European opportunities
Kotak identifies ammunition as a particularly promising area for Indian exporters.
Indian ordnance factories and private companies such as Solar Industries are among the potential beneficiaries. There are already examples of Indian ammunition reaching European markets.
In 2023, an Indian manufacturer supplied the Czech Republic with 80,000 rounds of 120mm mortar ammunition and 50,000 rounds of 125mm tank shells, according to Kotak.
In 2024, an Indian Ordnance Factory exported its first 100,000 units of 155mm M107 artillery shells to a European Union country.
These deals provide evidence that Indian manufacturers can meet the requirements of European customers, including NATO-standard ammunition requirements.
Aerospace could open another European door
India’s aerospace industry could also benefit from Europe’s growing defence requirements. Kotak identifies companies including Tata Advanced Systems, Dynamatic Technologies, HAL and BEL as potential beneficiaries.
Existing supplier relationships with Airbus, the Tata-Airbus C295 joint venture and Dassault’s MRO presence in Uttar Pradesh could help Indian companies expand their role in European aerospace supply chains. The opportunity also extends to engines, radar and electronic systems.
HAL’s work with Safran on the development of an engine for the Advanced Medium Combat Aircraft could deepen India’s participation in international combat-aircraft technology. Meanwhile, BEL’s partnership with Thales is developing radar technology that could have applications in global markets, including Europe.
Armenia: from components to complete weapons
If Europe represents an opportunity for India to become a larger industrial supplier, Armenia represents something different: a market for complete Indian defence systems. Kotak estimates that Armenia historically sourced 93.7% of its arms imports from Russia during 2011-20.
However, Armenia’s security environment and difficulties with Russian supplies accelerated its efforts to diversify defence suppliers. Kotak estimates that $1 billion-$2 billion of additional Armenian contracts could emerge in the future, potentially spanning small arms to missile systems.
The Armenian market is particularly important because Indian companies are not merely supplying components. They are selling complete indigenous systems.
India’s growing weapons portfolio in Armenia
Indian companies have secured a range of contracts with Armenia. According to Kotak, these include:
Konkurs-M anti-tank guided missiles from Bharat Dynamics
ATAGS 155mm artillery systems from Bharat Forge
Akash medium-range surface-to-air missiles from Bharat Dynamics
Pinaka multiple rocket launchers from Solar Industries and the erstwhile Ordnance Factory Board
MTA(G) 155mm artillery systems from Bharat Forge
Anti-drone systems from Zen Technologies
Trajan 155mm towed artillery systems from Larsen & Toubro
Africa could be India’s next frontier
Beyond Europe and Armenia lies a potentially much larger market: Africa. Kotak describes Africa as the “next frontier” for India’s defence exports. According to the brokerage, India is already the third-largest arms supplier to Africa, with a 15% share, behind China and Russia. Countries including Nigeria, Egypt, Algeria and Morocco have shown interest in Indian defence products.
The potential export basket includes helicopters such as Dhruv, fighter aircraft including Tejas and armoured vehicles. But, selling to Africa presents a challenge that goes beyond technology, it is the financing matters.
India is using financing to compete in Africa
Many African countries have massive defence requirements but face budget constraints. Kotak says India is attempting to address this through mechanisms such as rupee-denominated credit lines, an expanded network of defence advisers and initiatives such as AFINDEX.
The firm also noted the Tata-Morocco relationship as an example of India’s broader effort to deepen defence-industrial engagement with African countries.
This means India’s competition in Africa could involve not just the weapon being offered, but also the financing, training, maintenance and industrial cooperation attached to the deal.